JM, I wonder how many on this forum now, never had a toy train set at some stage growing up?
I suspect few. Yes current hobbyists have it good, therefore the hobby is doing ok right now, but if half decent toy train sets disappear from the market, and fewer youngsters get that first exposure to model trains hurtling around their bedroom floor the long term future for the hobby may not be as bright - the supply of hobbyists diminishes, market constricts, prices rise, market constricts further, etc. Todays modellers are little boys who grew up, but less kids now = less grown up modellers in the future. It does seem to be sunset industry but the sun probably won't ever fully set, leaving a small thriving hobby of specialists and higher prices.
30 years ago most major high streets in the UK had a really good model train shop or toy shop that had a decent Hornby railways section, but most seem to have closed. It's not so long ago Dublin had many more than just one decent model railway shop. I remember three that had fabulous layouts in store!
We are lucky here in Ireland that the hobby got a major lifeline from Murphy Models and the supporting cast of small symbiant suppliers that supply Irish RTR stock, kits and accessories. I do hope Hornby return to profitability and have fond memories of the introduction they gave me to this hobby when they had different shareholders and were called Hornby-Dublo.